Ocado Reports Strong Rise In Sales Despite “Very Competitive” Market

Ocado has posted another strong rise in quarterly sales despite a “very competitive” market.

For the 12 weeks to 7 August, the online grocer’s group sales (including its Morrisons arrangement) climbed by 15.4% to £314m, whilst retail sales for its own operations rose 13.6% to £286.4m.

Average orders per week increased by 18.9% to 226,000, although amid deflationary pressure, average order size fell 3.4% to £107.94.

Whilst talking up the group’s online offer being increasingly popular with shoppers, Chief Executive Tim Steiner warned the intensely competitive market was hitting its profits. “As the market remains very competitive, we are seeing sustained and continuing margin pressure and there is nothing to suggest that this will change in the short term,” he said.

“However, Ocado’s combination of choice, competitive pricing, and industry-leading service has contributed to an increase in average orders by nearly 19%, our best volume performance in more than five years.

“We are confident that our commitment to further improving the customer experience through constant innovation, supported by our world-class proprietary technology, will allow us to continue to grow ahead of the online grocery market, and substantially ahead of the market overall.”

NAM Implications:
  • Where at: Key is average order size of £107, absorbing costs of delivery
  • Where headed: Competition has to be faster online fulfilment via Amazon, in Gtr London, and holding – even increasing – numbers of orders per week, attracting even more attention from online competitors…
  • How it affects you: Pressure will increase for faster, smaller, more frequent zero-defect deliveries aimed at 100% ‘on-shelf’ availability
  • Action: Up the ante on your competitors by exceeding these expectations